OKEx suspends withdrawals following arrest of founder

OKEx suspends withdrawals following arrest of founder

By Benson Toti - min read

The absence of the private key holder prevents transactions from occurring, but the security of the assets “remains unaffected”

OKEx, a crypto exchange based in Malta, has suspended cryptocurrency withdrawals on the platform after its Chinese founder was taken away by police.

Xu Mingxing was taken by the police one week ago and according to someone who is close to the company, has not been seen in his work-related social media group recently. No details have been released on the investigation just yet. Recently, there have been indications of a renewed crackdown on money-laundering activities on over the counter (OTC) cryptocurrency trading platforms.

OKEx revealed in a statement that the suspension of withdrawals happened because one of the exchange’s private key holders is currently cooperating with the public security bureau in an ongoing investigation. Two persons who are close to the cryptocurrency exchange speculate that the key holder is Xu, because he is known for being a tycoon who has a hands-on management style with the company’s finances.

The exchange has stated it is currently “out of touch” with the key holder, which has prevented them from authorising any transactions. OKEx reassured their clients, however, that the security of their customers’ assets will not be affected by the event.

The Chief Executive Officer (CEO) of OKEx, Jay Hao, said on Weibo that the decision to temporarily suspend the withdrawals was caused by the personal issues of the private key holder.

This is not the first time that Xu has been in trouble. In September 2018, he was detained by the police in the midst of a dispute with investors, who had incurred huge losses on his Bitcoin exchange platform OKCoin.

Many investors complained that on September 5 of that year, when the value of Bitcoin and other cryptocurrencies plummeted by almost 10%. The OKCoin platform crashed, which caused massive losses for many of the investors who traded cryptocurrency futures on the platform.

In the past, OKCoin and other China-based Bitcoin trading platforms closed their Chinese mainland trading operations and moved offshore after regulators forbade fundraising through initial coin offerings (ICO) in August 2017. After this event, Xu founded OKEx and registered in Malaysia, with the OKEx website confirming that the operators of the exchange are based in Malta and the Seychelles.

Both OKCoin and OKEx still have offices in Beijing and Shanghai, and allow domestic investors to trade cryptocurrencies through OTC trading. Users can buy popular cryptocurrencies from merchants that have been verified by OKEx similar to e-commerce platforms such as Amazon.